Reno Auto Sales, Inc. v. Prospect Park Sav. & Loan Ass'n

• Decision Date: 09 October 1990
• Citation: 243 N.J.Super. 624,581 A.2d 109
• Parties: RENO AUTO SALES, INC., Plaintiff-Appellant, v. PROSPECT PARK SAVINGS & LOAN ASSOC., a Savings & Loan Assoc. of the State of N.J., Richard Fox and Detlef Vormschlag, Defendants-Respondents, and C.W.I. Car Wholesalers, Inc. and William Bliwise, Defendants. BERGEN AUTO IMPORT/EXPORT, INC., Plaintiff-Appellant, v. PROSPECT PARK SAVINGS & LOAN ASSOC., a Savings & Loan Assoc. of the State of New Jersey and Richard Fox, Defendants-Respondents, and C.W.I. Car Wholesalers, Inc., and William Bliwise, Defendants.
• Court: New Jersey Superior Court — Appellate Division

Page 624

243 N.J.Super. 624

581 A.2d 109

RENO AUTO SALES, INC., Plaintiff-Appellant, v. PROSPECT PARK SAVINGS & LOAN ASSOC., a Savings & Loan Assoc.

of the State of N.J., Richard Fox and Detlef

Vormschlag, Defendants-Respondents,

and

C.W.I. Car Wholesalers, Inc. and William Bliwise, Defendants.

BERGEN AUTO IMPORT/EXPORT, INC., Plaintiff-Appellant, v. PROSPECT PARK SAVINGS & LOAN ASSOC., a Savings & Loan Assoc.

of the State of New Jersey and Richard Fox,

Defendants-Respondents,

and

C.W.I. Car Wholesalers, Inc., and William Bliwise, Defendants.

Superior Court of New Jersey,

Appellate Division.

Submitted Sept. 11, 1990.

Decided Oct. 9, 1990.

Schepisi & McLaughlin, for plaintiffs-appellants (Kenneth C. McBroom, Englewood Cliffs, on the brief).

Stern, Steiger, Croland, Tanenbaum & Schielke, for defendant-respondent, Prospect Park Sav. & Loan Ass'n (Jay Rubenstein and Mindy Michaels Roth, Paramus, on the brief).

Cole, Yamner & Bray, for defendant-respondent, Detlef Vormschlag (Peter R. Bray, Paterson, on the brief).

Respondent Richard Fox did not file a brief.

Before Judges ANTELL, O'BRIEN and KEEFE.

The opinion of the court was delivered by

KEEFE, J.A.D.

The issue presented on this appeal requires that we interpret the Supreme Court's direction in Cogdell v. Hospital Center at Orange, 116 N.J. 7, 560 A.2d 1169 (1989), that the mandatory party-joinder rule announced in that case be applied "prospectively and to all cases not already on appeal." Id. at 28, 560 A.2d 1169.

Plaintiffs in these consolidated actions, Reno Auto Sales, Inc. (Reno) and Bergen Auto Import/Export, Inc., (Bergen), appeal from the entry of summary judgment in favor of defendants Prospect Park Savings & Loan Assoc. of the State of N.J. (Prospect), Richard Fox, and Detlef Vormschlag. ¹ The Law Division judge, applying the Cogdell decision, reasoned that plaintiffs should have joined the movant/defendants as parties in prior litigation stemming from the same transactions and concluded that the current law suits were barred by the entire controversy doctrine. For the reasons stated herein we disagree with that conclusion and reverse the judgment under review.

The litigation under discussion arises out of a simple transaction involving the sale of two automobiles. Plaintiff Bergen owned a 1981 Saab and plaintiff Reno owned a 1983 Mercedes Benz. Each of these automobiles was sold to C.W.I. Car Wholesalers, Inc. (C.W.I.) on January 17, 1985. In each instance, C.W.I. made payment for the vehicle by check drawn on its account with defendant Prospect. Each check was dishonored by Prospect with the notation "Account Closed" (Bergen) or "Endorsement Cancelled" (Reno). C.W.I. apparently sold and delivered the Saab to Ramsey Auto Imports and sold and delivered the Mercedes to Lease-A-Car Corp. On June 13, 1985 Lease-A-Car Corporation, of which defendant Detlef Vormschlag is apparently a principal, instituted a suit against Reno and Clifford W. Snedecker, Director of the Division of Motor Vehicles alleging that it purchased the Mercedes from C.W.I. for $29,700 but that C.W.I. had failed to deliver the title to it. The complaint further alleged that title to the vehicle was being held by defendant Reno and that "[u]pon information and belief Reno Auto Sales gave or sold the vehicle to C.W.I. with the understanding that it was or might be sold." Lease-A-Car Corporation sought a declaratory judgment that it was the owner of the vehicle rather than Reno. Reno filed an answer and counterclaim in which it sought conversion damages in the amount of $31,200 against Lease-A-Car Corporation, or, in the alternative, a replevin of the automobile. ² That matter proceeded to trial and resulted in a judgment in favor of Reno on April 10, 1986 directing Lease-A-Car Corporation to deliver possession of the Mercedes to Reno. Neither Prospect, Fox, C.W.I., Bliwise nor Vormschlag were made parties to that litigation.

On July 9, 1985 Bergen instituted suit against C.W.I., Bliwise as principal of C.W.I., Ramsey Auto Imports and Ray Van Doren, a principal of Ramsey, seeking a return of the Saab automobile or conversion damages in the amount of $6,780. Bergen also sought damages for the "wrongful detention of said equipment." ³ That litigation terminated in a final judgment dated November 1, 1985 in favor of Bergen and against defendants Ramsey Auto Parts and Ray Van Doren for possession of the vehicle together with the payment of certain money from an escrow account being held by attorneys involved in the litigation. Neither Prospect, Fox nor Vormschlag were parties to that litigation.

On February 2, 1987 Reno instituted a suit against Lease-A-Car Corporation seeking money damages for damage done to the Mercedes while it was in the possession of Lease-A-Car prior to its return to Reno. That action was dismissed on motion for summary judgment on November 4, 1987 on the grounds that it was barred by the entire controversy doctrine. (Mandatory joinder of claims.) That judgment is not challenged on appeal.

On February 24, 1987 Reno and Bergen filed separate complaints against defendants Prospect, Fox, C.W.I., Bliwise and Vormschlag. Each of the complaints was substantially identical to the other except that in the Reno complaint the focal point was the Mercedes transaction while in the Bergen complaint it was the Saab transaction. Each of the complaints alleged, among other things, that defendant Fox, as Prospect's agent, and defendants Bliwise and Vormschlag acted in concert to create a false impression that C.W.I. was a solvent corporation when it was not and that Fox and Vormschlag received illegal kickbacks in exchange for uncollateralized loans issued to Bliwise by Prospect. The plaintiffs in each case alleged that they suffered money damages by reason of the defendants' fraud and conspiracy. The complaints were subsequently consolidated for trial. ⁴

In April, 1988 defendant Prospect filed a motion to dismiss the consolidated complaints based upon the entire controversy doctrine. The motion was denied. On July 24, 1989 the Supreme Court decided Cogdell v. Hospital Center at Orange, supra. In that case Justice Handler, writing for the majority, said We thus conclude that the entire controversy doctrine appropriately encompasses the mandatory joinder of parties. Accordingly, we now hold that to the extent possible courts must determine an entire controversy in a single judicial proceeding and that such a determination necessarily embraces not only joinder of related claims between the parties but also joinder of all persons who have a material interest in the controversy. [116 N.J. at 26, 560 A.2d 1169.]

Thereafter, defendant Prospect renewed its motion for summary judgment. The motion was joined by defendant Fox. As stated earlier, the motion resulted in a judgment in favor of all defendants.

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